What’s Going On with Bidding Wars?

In a strong seller’s market, like the one we have experienced over the past few years, bidding wars are common and expected. This makes sense! A seller’s market is defined as a market in which the inventory of homes for sale cannot satisfy the number of buyers who want to purchase a home.

According to the Cambridge English Dictionary, bidding wars occur when two or more parties repeatedly outbid each other as they compete to purchase something- in this case, a home.

In some areas of the country, first-time buyers have been met with fierce competition throughout their experience. Some have been out-bid multiple times before finally winning a bid on a home to call their own.

According to the latest Existing Home Sales Report from the National Association of Realtors (NAR), there is currently a 3.7-month supply of homes for sale.

With the current number of houses listed for sale and the level of demand from buyers, this means it would take 3.7 months for all the homes listed to sell if no additional listings came to market. Any supply number under a 6-month supply is considered a seller’s market. According to NAR, the housing market hasn’t had a 6-month supply of homes for sale since August 2012.

Good News for Buyers

A recent report shows that the percentage of houses sold including a bidding war before settling on a final price decreased from 53% in January of 2018 to 13% this year.

One reason for the decline is an influx of homes being listed for sale. Even though the month’s supply number is not increasing, the number of homes for sale is. The chart below shows the year-over-year change in inventory over the last 12 months.

­­

As you can see, the number of homes for sale has started to build over the last eight months. Prior to this reversal, inventory levels had fallen for 36 consecutive months when compared to the year before.

Danielle Hale, realtor.com’s Chief Economist, gave some insight into why bidding wars are less common on a local level this year,

“[Last year] you might have been the only listing in your neighborhood, and you could put your home up at a certain list price and you would likely see multiple offers at or above that list price. That tide is turning this year.

It’s going to depend on what neighborhood you’re in, but we expect it to be more common this year that you won’t be the only listing.”

Inventory in the luxury and premium markets (the top 25% of listings in an area by price), is increasing at a greater rate than the starter home market. As the choices buyers have continued to increase, the likelihood of a bidding war will decrease.

Bottom Line

If you are debating listing your house for sale this year, you may not want to wait for additional competition as inventory continues to rise.

Testimonials

“Kevin is fantastic and easy to work with. He explains the process really well and can make sure as buyers that we don’t make any costly mistakes. He has great knowledge of the local areas and found a lot of homes that fit my criteria.”

– Kiran B.

“I just used Kevin to sell my home and buy another and he did an absolute masterful job. I’ve been fortunate enough to have done several real estate transactions in the past 10 years and he is without question the best realtor I have ever worked with and provided a TON of value to my wife and I. There is no doubt that Kevin will be my go-to realtor from now on and I will recommend him to anyone I possibly can”

– Amit S

“Kevin is extremely knowledgable in the real estate industry! He is extremely professional and did an excellent job negotiating on my behalf. I strongly recommend using Kevin for your buying or selling needs!”

– Sharon M

“Our home was listed and sold within one day. The experience of working with Kevin Meyer was fantastic. He was very knowledgeable in all areas of listing, showing and completing the sale. We would definitely recommend Kevin Meyer to anyone selling their home.”

– Darrell P

“What more can I say, outstanding realtor. My husband and I highly recommend Kevin”

– Kai S

“He has great market knowledge and was very helpful in educating us on the local real estate landscape. I am so impressed with Kevin and strongly recommend him to anyone looking for a home in the greater Seattle area.”

– Gretchen V

I wouldn't hesitate for a second to recommend Kevin to a friend or family member. He was amazing to work with. Our real estate experience was phenomenal!

Steven H.

With over 13 years in sales and marketing throughout the Eastside and Seattle, Kevin is an expert in real estate for our marketplace. Kevin prides himself on his results focused work ethic and ability to facilitate transactions; his extraordinary customer service ensures that he over-delivers against his clients expectations. Read More…